Apollo Tyres
Apollo Tyres is a top tyre manufacture in the country, with a significant presence in the OEM segment as well as the replacement market. Emkay Global has recommended to buy the stock of Apollo Tyres and has set a target price that is 26% higher than the current market price.
The stock of Apollo Tyres was last trading at Rs 226 on the NSE, against the brokerage houses price target of Rs 290.
According to the firm, the management has guided for revenue CAGR of 16% over FY21-26E, driven by expectations of volume growth in underlying industry in India at 10- 13% CAGR for PCR tyres, 5-8% CAGR for CVs, and 2-4% for Tractors.
The margins are also expected to see improvement due to continuing radialization in Truck & Bus industry from 47% in FY21 to 55-60% in FY25E.
“Increase in exports for standalone from 9% of revenue in FY21 to 20% in FY26E, with focus on Europe, USA, Middle East and Africa regions and launch of new products will help margins,” Emkay Global has said.
The broking firm is factoring in revenue/earnings CAGRs of 12%/14% over FY21-24E and maintains a Buy on the stock of Apollo Tyres with a price target of Rs 290.
NALCO
Broking firm, Motilal Oswal has a buy on the stock of NALCO, with a price target of Rs 93, which is almost 20% higher than the current market price of Rs 78.
NALCO is a leading aluminium player and Motilal Oswal expects aluminium prices to remain strong, which should benefit NALCO.
“The management has announced a 1mtpa alumina refinery expansion at capex of Rs 64 billion and expects to complete the project in FY23. Given the slow execution, however, we expect commissioning by FY24. We value the stock on an SoTP basis at 5x FY23E EV/EBITDA and a 0.75x book value for growth CWIP to arrive at target price of Rs 93. At current market price, it provides an attractive dividend yield of 6%. Maintain Buy,” Motilal Oswal has said.
Steel Authority of India
ICICI Direct has a buy call on the stock of Steel Authority of India with a price target of Rs 160, which is almost 22% higher than the current market price of Rs 131.
The broking firm has said that the company has adopted a focused approach on improving its volume, improving its operational efficiencies, operating the facilities at optimum levels, deleveraging its balance-sheet, etc. In line with its focus on reducing the borrowings.
“Steel Authority of India has reduced its net debt by Rs 16200 crore in FY21. Going forward also, we expect the company’s net debt to further reduce by Rs 6,800 crore, over the next couple of years. We model sales volume of 17 metric tonnes for FY22E and 19 metric tonnes for FY23E.
We value the stock at 5.5x FY23E EV/EBITDA and arrive at a target price of Rs 160. We maintain our BUY recommendation on the stock of SAIL,” ICICI Direct has said in its report.
REPCO Home Finance
REPCO Home Finance is a smaller home finance company, whose stock broking firm Motilal Oswal is bullish on and has a buy rating.
The broking firm expects loan book growth to remain muted for the company even in FY22E.
“Improvement in asset quality is encouraging as GS 3 fell below 4% after remaining sticky between 4% and 4.3% for the last seven quarters. We see the efforts put in by REPCO to improve collections and achieve resolutions/upgrades in GS 3 reflecting in improved asset quality.
Availability of low-cost NHB borrowings will not sustain indefinitely. We expect further benefits from lower incremental cost of borrowings to be limited. We estimate a 12% PAT CAGR over FY21-24E. REPCO trades at 0.85x FY23E P/BV, which is undemanding. We have a Buy rating on the stock with a target price of Rs 440 (1x FY23E PBVPS),” the brokerage has said.
Shares of REPCO Home Finance were last seen changing hands at Rs 375 on the NSE.
Bandhan Bank
Broking firm, Motilal Oswal has a neutral rating on the stock of Bandhan Bank and sees an upside of nearly 10% from the current levels of Rs 335 on the stock.
“For players like Bandhan Bank whose SMA book stands at 8.6% currently (from 16.6% in 3QFY21) the double bonanza of MFI package from Assam state government and the central government relief measures for the MFI sector will enable faster turnaround in asset quality/ earnings trajectory.
We are turning more sanguine on asset quality over 2HFY22 though remain watchful on collection efficiency in the near term, mainly in key state of West Bengal (45% of MFI portfolio). We thus increase our target price to Rs 375 (from Rs 335) based on 2.5x FY23E book value though we maintain our NEUTRAL rating as we await more clarity around implementation of these schemes,” the broking firm has said.
Disclaimer
All of the above stocks are picked from the reports of brokerage firms. Investing in stocks are risky and investors should do their own research. The author, the brokerage firms or Greynium Information Technologies is not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as markets have run-up significantly.
